Full Breakdown
Emerging-Market Equity Outflows Spike as South Korea and Taiwan Lead June Retreat
7/11/2026, 12:34:13 PM
Core Outflows and Regional Breakdown
In June, foreign investors withdrew a net $46.1 billion from emerging-market equities, the sharpest decline in more than a quarter-century. The Institute of International Finance (IIF) reported that $30.5 billion left South Korean stocks and $18.3 billion exited Taiwanese equities, accounting for the bulk of the sell-off. By contrast, emerging-market bonds attracted $28.3 billion in inflows, limiting the overall portfolio loss to $17.8 billion. Emerging-Asia markets recorded $27 billion in total outflows, while Latin America, emerging Europe, and the Middle East-North Africa regions posted net inflows. China’s equity outflows rose to $14 billion, reversing a May inflow of $8.1 billion, and its debt saw a $3.7 billion withdrawal.
IIF Assessment and Forward Outlook
IIF chief economist Jonathan Fortun attributed the equity pull-back to “higher global discount rates, China uncertainty, weaker earnings confidence and sensitivity to tech and energy positioning.” He warned that a more hawkish U.S. Federal Reserve under new chairman Kevin Warsh, together with renewed oil-price volatility, could tighten dollar liquidity and raise the hurdle for emerging-market risk. Fortun noted that sovereign issuance in the first half of the year reached roughly $170 billion, the strongest in recent years, with net issuance above $100 billion for the year.
Market Impact and Risks
The divergence between equity sell-offs and bond purchases underscores investors’ continued willingness to lend to emerging markets while shunning broader equity risk. The IIF’s analysis suggests that future capital flows will hinge on U.S. monetary policy direction and commodity-price stability, with tech-heavy markets in South Korea and Taiwan remaining especially vulnerable.
